Weakening rupee is biggest risk to inflation: Subbarao

Duvvuri Subbarao, Governor of the Reserve Bank of India, stated that the declining of the rupee is the biggest risk to inflation.

RBI left interest rates unchanged as it supports a battered rupee but it would roll back recent liquidity tightening measures when stability returns to the currency market enabling it to resume supporting growth.

RBI also has reservations on issuing sovereign bonds and as it feels that sovereign bond issue would compromise financial stability. As per RBI, the cost of a sovereign bond issue outweighs the benefits at current juncture.